Hurricane Energy PLC (LON:HUR) announced a significant partnership deal with Spirit Energy earlier this morning. This transaction opens up a significant new work programme across Hurricane’s assets. Spirit Energy is to fund US$387 million of Hurricane’s shares and will receive a 50% stake in return.

The UK based oil and gas company, Hurricane Energy, focuses on hydrocarbon resources in naturally fractured basement reservoirs.  Additionally, Spirit Energy is an independent exploration and production operator. It is owned by Centrica PLC (69%) and two of Bayerngas Norge’s former shareholders led by Stadtwerke München Group (31%).

The 50% farm-in of Hurricane’s Lincoln and Warwick licences will cover the Greater Warwick Area. The partnership hopes to accelerate their potential monetisation by targeting reserve growth.

The Greater Warwick Area programme will take place in two phases across 2019 and 2020. Following the successful drilling across the two years, Spirit Energy is set to take on the role of the Greater Warwick Area licence operator.

Hurricane Energy shares have seen an 11.01% increase this morning after the deal.

Chief Executive of Hurricane, Dr Robert Trice, said:

“We are delighted to be working with Spirit Energy. We share a common vision for the development of the Greater Warwick Area and more importantly a shared understanding of the potential of fractured basement in the UKCS. Their prior experience of basement in Norwayand elsewhere underpins this understanding.

“This transaction allows us to accelerate monetisation of our GWA resource base through a work programme designed to target significant reserve growth. The initial phases include three wells, one of which is anticipated to be tied-back to the Aoka Mizu in 2020. At this point Hurricane will have two significant accumulations developed to Early Production System stage, providing long term production data – critical to the realisation of value from fractured basement fields – as well as generating significant cash flows.

“We are already planning for three further GWA wells and commencement of full field development FEED during 2020, allowing us to aim for development sanction in 2021.

“As a result of the GWA Farm-in, Lancaster EPS cash flows have been freed up to focus on appraisal of the Greater Lancaster Area.

“As we approach first oil on Lancaster, which remains on track for 1H 2019, we have increased financial flexibility and two parallel work programmes to drive our Rona Ridge resources towards monetisation.”